Research Perspectives and Challenges for Bitcoin and Cryptocurrencies

Bitcoin has emerged as the most successful cryptographic currency in history. Within two years of its quiet launch in 2009, Bitcoin grew to comprise billions of dollars of economic value, even while the body of published research and security analysis justifying the system\u27s design was negligible. In the ensuing years, a growing literature has identified hidden-but-important properties of the system, discovered attacks, proposed promising alternatives, and singled out difficult future challenges. This interest has been complemented by a large and vibrant community of open-source developers who steward the system, while proposing and deploying numerous modifications and extensions. We provide the first systematic exposition of the second generation of cryptocurrencies, including Bitcoin and the many alternatives that have been implemented as alternate protocols or ``altcoins.\u27\u27 Drawing from a scattered body of knowledge, we put forward three key components of Bitcoin\u27s design that can be decoupled, enabling a more insightful analysis of Bitcoin\u27s properties and its proposed modifications and extensions. We contextualize the literature into five central properties capturing blockchain stability. We map the design space for numerous proposed modification, providing comparative analyses for alternative consensus mechanisms, currency allocation mechanisms, computational puzzles, and key management tools. We focus on anonymity issues in Bitcoin and provide an evaluation framework for analyzing a variety of proposals for enhancing unlinkability. Finally we provide new insights on a what we term disintermediation protocols, which absolve the need for trusted intermediaries in an interesting set of applications. We identify three general disintermediation strategies and provide a detailed comparative cost analysis

A Blockchain-Based Solution for Enabling Log-Based Resolution of Disputes in Multi-party Transactions

We are witnessing an ongoing global trend towards the automation of almost any transaction through the employment of some Internet-based mean. Furthermore, the large spread of cloud computing and the massive emergence of the software as a service (Saas) paradigm have unveiled many opportunities to combine distinct services, provided by different parties, to establish higher level and more advanced services, that can be offered to end users and enterprises. Business-to-business (B2B) integration and third-party authorization (i.e. using standards like OAuth) are examples of processes requiring more parties to interact with each other to deliver some desired functionality. These kinds of interactions mostly consist of transactions and are usually regulated by some agreement which defines the obligations that involved parties have to comply with. In case one of the parties claims a violation of some clause of such agreement, disputes can occur if the party accused of the infraction refuses to recognize its fault. Moreover, in case of auditing, for convenience reasons a party may deny to have taken part in a given transaction, or may forge historical records related to that transaction. Solutions based on a trusted third party (TTP) have drawbacks: high overhead due to the involvement of an additional party, possible fees to pay for each transaction, and the risks stemming from having to blindly trust another party. If it were possible to only base on transaction logs to sort disputes out, then it would be feasible to get rid of any TTP and related shortcomings. In this paper we propose SLAVE, a blockchain-based solution which does not require any TTP. Storing transactions in a public blockchain like Bitcoin’s or Ethereum’s provides strong guarantees on transactions’ integrity, hence they can be actually used as proofs when controversies arise. The solution we propose defines how to embed transaction logs in a public blockchain, so that each involved party can verify the identity of the others while keeping confident the content of transactions

The Future of Bitcoin

Evolved by way of an anonymous programmer, Bitcoin is a global cryptocurrency and a machine for virtual currency. The transactions take location immediately among the users minus any intermediaries. Bitcoin is an awesome mode of exchange whilst in comparison to traditional banks. Those transactions are verified through network nodes and recorded in a public dispensed ledger called blockchain. The price of bitcoins are volatile i.e. they could unpredictably boom or lower over a quick time period. They are taken into consideration excessive-danger assets whose transactions can simplest be refunded and not reversed. The bitcoin came into life in January 2009, with Satoshi Nakamoto mined the primary block of bitcoins ever. Given that then, some of supporters engaged in transactions and acquired bitcoins. International locations round the world started out accepting bitcoin as a legitimate mode of currency like the United States. However, some countries like Djibouti haven’t legalized yet the usage of this foreign money due to some of reasons. The targets of this paper are to understand the awareness about the existence of bitcoins, to evaluate the perception of bitcoin as the future currency and to research the possibility of legalization of bitcoins in Djibouti. Keywords: Bitcoin, cryptocurrency, decentralized, experimental, legalization, security.

МІСЦЕ КРИПТОВАЛЮТ У СУЧАСНОМУ СВІТОВОМУ ФІНАНСОВОМУ ПРОСТОРІ

The article investigates the issue of introducing cryptocurrencies intoday's global financial space. Dynamics of distribution and circulationof cryptocurrencies and their variants are analyzed. Capitalization and rates of the most popular cryptocurrencies for 2018 have been explored. Issues related to cryptocurrency transactions in Ukraine areoutlined. It has been pointed out that ignoring by state structures ofcryptocurrencies as a way of settling payments between citizens andlegal entities is a loss of key opportunities in the financial space. It isdetermined that the main features of cryptocurrencies that distinguishthem from the ordinary currency are their decentralization, that is, theabsence of a regulatory that would regulate the cryptocurrency. Cryptocurrency is an alternative expression of ordinary currency and has a number of advantages and disadvantages. The biggest problem withcryptocurrencies now is the sharp fluctuation of the exchange rate,which makes it impossible to use cryptocurrencies as a means ofpayment. It is established that today there is no data on the amount ofcryptocurrencies owned by the population of a country, which reducesthe effectiveness of the analysis of the impact of cryptocurrencies onthe monetary policy and financial security of the banking systems ofthe countries in the world. The total number of cryptocurrency varieties has reached about 2000, although its most common type isbitcoin. The question of buying and using e-currency is rather controversial. Most countries have not yet decided whether cryptocurrency should be regulated and controlled, and how. If Ukraine does not set its "rules of the game" we will lose substantial amounts that could come to the budget as taxes, and will also have an extremely limited set of tools to control the cryptocurrency market.В статье исследован вопрос введения криптовалюты в современном мировом финансовом пространстве. Проанализирована динамика распространения и обращения криптовалют и их разновидностей. Исследованы капитализация и курсы наиболее популярных криптовалют по состоянию на 2018 год. Указаны проблемы, связанные с проведением операций с криптовалютами в Украине.Определено, что игнорирование государственными структурамикриптовалюты как способа взаиморасчетов граждан и юридических лиц является потерей ключевых возможностей в финансовомпространстве. Определено, что основными особенностями криптовалют, которые отличают их от обычной валюты, является их децентрализация, то есть отсутствие регулятивного органа, которыйбы регулировал криптовалюту и способ ее эмиссии. Криптовалютаявляется альтернативным выражением обычной валюты и имеетряд своих преимуществ и недостатков. Самой большой проблемойкриптовалюты сейчас остается резкое колебание курса, которыйне позволяет использовать криптовалюту в качестве платежногосредства. Установлено, что на сегодня нет данных об объемах криптовалют, находящихся в собственности населения той или инойстраны мира, что снижает эффективность анализа влияния криптовалюты на монетарную политику и финансовую безопасностьбанковских систем стран мира. Общее количество разновидностейкриптовалют достигла около 2000, хотя самый распространенныйвид – биткоин.В статті досліджено питання запровадження криптовалют у сучасному світовому фінансовому просторі. Проаналізовано динаміку розповсюдження та обігу криптовалют та іх різновидів. Досліджено капіталізацію та курси найбільш популярних криптовалют станом на 2018 рік. Зазначено проблеми, пов’язані з проведенням операцій з криптовалютами в Україні. Окреслено, що ігнорування державними структурами криптовалют як способу взаєморозрахунків громадян та юридичних осіб є втратою ключових можливостей у фінансовому просторі. Визначено, що основними особливостями криптовалют, які відрізняють їх від звичайної валюти, є їх децентралізація, тобто відсутність регулятивного органу, який би регулював криптовалюту та спосіб її емісії. Криптовалюта є альтернативним вираженням звичайної валюти і має низку своїх переваг та недоліків. Найбільшою проблемою криптовалют зараз залишається різке коливання курсу, що не дає змогу використовувати криптовалюти як платіжний засіб. Встановлено, що на сьогодні немає даних щодо обсягів криптовалют, які перебувають у власності населення тієї чи іншої країни світу, що знижує ефективність аналізу впливу криптовалют на монетарну політику і фінансову безпеку банківських систем країн світу. Загальна кількість різновидів криптовалют сягнула вже близько 2000, хоча найпоширеніший її різновид – біткоїн

An analysis of acceptance policies for blockchain transactions

The standard acceptance policy for a cryptocurrency transaction at most exchanges is to wait until the transaction is placed in the blockchain and followed by a certain number of blocks. However, as noted by Sompolinsky and Zohar [16], the amount of time for blocks to arrive should also be taken into account as it affects the probability of double spending. Specifically, they propose a dynamic policy for transaction acceptance that depends on both the number of confirmations and the amount of time since transaction broadcast. In this work we study the implications of using such a policy compared with the standard option that ignores block timing information. Using an exact expression for the probability of double spend, via numerical results, we analyze time to transaction acceptance (performance) as well as the time and cost to perform a double spend attack (security). We show that while expected time required for transaction acceptance is improved using a dynamic policy, the time and cost to perform a double spend attack for a particular transaction is reduced.First author draf

Similarities and Learnings from Ancient Literature on Blockchain Consensus and Integrity

In this paper, we have studied how the text of an ancient literature on how their integrity has been preserved for several centuries. Specifically, The Vedas is an ancient literature, which has its text remained preserved without any corruption for thousands of years. As we studied the system that protects the integrity of the text, pronunciation and semantics of the The Vedas, we discovered a number of similarities it has with the current concept of blockchain technology. It is surprising that the notion of de-centralized trust and mathematical encodings have existed since thousands of years in order to protect this work of literature. We have presented our findings and analysis of the similarities. There are also certain technical mechanisms that The Vedic integrity system uses, which can be used to enhance the current digital blockchain platforms in terms of its security and robustness

Dynamically Adjusting the Mining Capacity in Cryptocurrency with Binary Blockchain

Many cryptocurrencies rely on Blockchain for its operation. Blockchain serves as a public ledger where all the completed transactions can be looked up. To place transactions in the Blockchain, a mining operation must be performed. However, due to a limited mining capacity, the transaction confirmation time is increasing. To mitigate this problem many ideas have been proposed, but they all come with own challenges. We propose a novel parallel mining method that can adjust the mining capacity dynamically depending on the congestion level. It does not require an increase in the block size or a reduction of the block confirmation time. The proposed scheme can increase the number of parallel blockchains when the mining congestion is experienced, which is especially effective under DDoS attack situation. We describe how and when the Blockchain is split or merged, how to solve the imbalanced mining problem, and how to adjust the difficulty levels and rewards. We then show the simulation results comparing the performance of binary blockchain and the traditional single blockchain